AIG posts 1Q loss on bailout payback, Japan quake

AP News
Posted: May 05, 2011 8:01 PM

Repayment of bailout aid and losses from the earthquake and ensuing tsunami that ravaged Japan's northeast coast led to a first-quarter loss at American International Group Inc.

The global insurance company on Thursday reported a loss, after paying preferred dividends, of $543 million, or 35 cents a share. That compared with net income of $359 million, or $2.66 a share, a year earlier.

Its revenue fell to $17.44 billion from $18.56 billion last year.

The loss was mainly linked to AIG booking a $2.4 billion charge over its repayment of a Federal Reserve Bank of New York loan more than two years early. Meanwhile, Chartis, its recently reorganized property-casualty business, posted $1.7 billion in catastrophe losses from disasters including the March 11 earthquake and tsunami in Japan, the New Zealand earthquake and massive flooding in Australia. That was up from $500 million in catastrophe losses in 2010's first quarter.

AIG also set aside $385 million to pay the U.S. Treasury for the costs related to selling its shares. Operating income, however, rose to $2.0 billion for the quarter from $637 million in the prior-year period.

As the value of its investments increased, its capital markets portfolio earned $277 million. Its life insurance business, SunAmerica Financial Group, reported flat operating income of $1.1 billion.

In March, AIG paid the Treasury Department nearly $7 billion to trim its outstanding balance to just under $60 billion of the $182 billion bailout it received in 2008, as the U.S. government saved it from collapse. The Treasury Department still owns 92 percent of AIG through its holdings of the company's common stock, which it is expected to begin selling in May. Treasury officials have said they expect to recoup the full amount of the bailout.

Since 2008, AIG has sold 33 businesses and raised more than $57 billion in cash and securities. Last year alone, AIG raised more than $37 billion, primarily by selling two international life insurance divisions.

AIG's stock fell 46 cents to $30.33 in after-hours trading following the release of the earnings report. The stock had closed the regular session down 85 cents, or 2.7 percent, at $30.79.